Super Retail Group latest business to call for penalty rate reform

Super Retail Group is the latest company to enter the debate over penalty rates, with chief executive Peter Birtles calling for a complete reworking of the Government’s industrial relations laws.

The comments come as business groups and companies lodge submissions with the Fair Work review, with many pushing for a number of reforms including scrapping penalty rates altogether. Unions are pushing to scrap exemptions for small businesses under the unfair dismissal code.

Birtles, whose company announced a 40% increase in net profit for the first half of the year yesterday, said the consumer environment has changed and therefore workplace practices must change as well.

“I think there needs to be some consideration for lower penalty arrangements on the weekend, and I think retailers can probably invest in providing a higher level of service to people on those days if the labour costs are lower,” he told SmartCompany this morning. 

“I’m broadly happy with the core thrust of the industrial relations arrangements, and I think they are fair…it’s more on the side of penalties.”

He said Super Retail stores are now paying a 75% premium under the current award regime for staff to work on weekends – and weekend sales now make up nearly 50% of total sales.

Birtles noted that unless changes are made the company will need to focus on more junior staff to save costs.

“The reality is quite a few businesses have to employ younger staff members,” he said, adding that he would rather have a balance of younger, and more experienced staff. 

Birtles’ comments have been echoed by Coca Cola chief executive Terry Davis, who said higher wages and penalty rates are hurting the quick services restaurant trade and food industry.

“Quick services restaurants and hotels are directly impacted by the penalty rates, particularly weekend penalty rates,” he said.

The debate over penalty rates has been at the forefront of the Fair Work review. Business groups including The Australian Chamber of Commerce and Industry have said penalty rates and current awards are crippling small business.

The Restaurant and Catering Association, in its submission to Fair Work, also said it wants public holiday rates overhauled, especially those it says double entitlements for some workers.

While businesses say wages are far too high considering the current retail environment, they also argue that awards are simply too complex to keep up with. As a result, businesses say they find it difficult to pay correct rates.

The Fair Work Ombudsman has cracked down on this, and today announced fast food chain Red Rooster would be taking part in a voluntary audit to ensure its wages are all legitimate. That audit follows similar agreements from McDonald’s and Domino’s Pizza.

Earlier this week, Domino’s chief executive Don Meij said labour costs would continue to rise, making Australian uncompetitive nation.

Retailers also argue higher wages are part of the reason nearly 500 stores have been announced to close from a variety of retail sub-sectors. Super Retail closed three stores in the last half.